Causes of the crisis
1. Digital technology ends film Kodak
First of all, it is the fierce price competition from the market field. Self-labeling (or retailer branding) drives down the price of Kodak products by 40%. In Eastern Europe and developing countries, cheap film also poses a great threat to Kodak, because people with low income levels pay more attention to price than brand and quality. Kodak has implemented a series of price counterattack strategies, which have worked to a certain extent, but it still cannot completely eliminate the negative impact of the price war.
Another challenge facing Kodak comes from the impact of digital imaging technology on traditional imaging technology. High cost, bulky equipment, and serious pollution are difficult problems to solve in the production and printing process of negatives and photo papers. Large size, inability to store permanently, and difficulty in finding are the inconveniences brought to people by using negatives and photo papers.
2. Staggering strategic transformation
Although Kodak began to feel the pain of shrinking traditional film business in 1998, Kodak's decision-makers have not been concerned about the impact on film sales. Dare to vigorously develop digital business.
After 2000, the global digital market continued to grow rapidly, almost tripling, while the global demand for color film began to decline rapidly at a rate of 10% per year. In 2002, Kodak's digitalization rate was only about 25, while its competitor Fuji had reached 60.
In 2004, Kodak launched 6 belated digital cameras, but the profit margin was only 1, and the revenue of its traditional business of US$8.2 billion shrank by 17.
In 2006, Kodak sold its entire digital camera manufacturing business to Flextronics of Singapore. In 2007, it sold its medical imaging division, one of its original four major businesses, to Canadian asset acquisition company OneXyi for US$2.55 billion. In the same year, its shares in Lucky were also transferred to Guangzhou Chengxin Venture Capital Co., Ltd. at a low price of US$37 million.
Since 2007, Kodak has implemented its second strategic reorganization, laying off 28,000 people, a rate of up to 50%. However, in 2008, the financial crisis broke out, demand weakened, and the market shrank. Its fourth quarter report showed that Kodak lost $133 million, and its annual revenue declined for the third consecutive year. Kodak, which barely made a profit by selling assets, was suddenly hit again. Return to original shape.
Kodak’s 2010 financial report showed a loss from continuing operations of US$58 million. Moreover, the main source of Kodak's revenue is still the sale of patents, while new product businesses such as inkjet printers have not yet truly opened up the market.
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Extended information
Kodak Inspiration
1. An unreliable "brand"
A widely known The popular legend about the brand is that if one day a fire burns down the Coca-Cola Company, as long as the formula is still there, a Coca-Cola Company will soon be rebuilt. Perhaps it is true. 99.61% water, carbonic acid, syrup, plus 0.39% formula, this is Coca-Cola. Among the top 100 most valuable global brands in 2008 jointly selected by Business Week and Interbrand, a world-renowned brand consulting agency, Coca-Cola's brand value exceeds US$68.7 billion.
Don’t forget that in the same selection, Kodak’s brand value exceeded US$7.8 billion in 2003, but only US$5.2 billion was left in 2004, let alone being completely eliminated in the future.
The once huge brand value is fleeting. The once huge brand equity on paper played little role in Kodak's rebirth. Since the first Olympic Games in 1896, Kodak has sponsored sports events, and brand promotion through large-scale sports events has become a traditional project of Kodak. Since the 1986 Olympic Games, the "TOP Plan" began, and Kodak became the "TOP Sponsor" of every Olympic Games before 2004.
Until the 2004 Athens Olympics, when Kodak began to enter a difficult period, it was still a "TOP sponsor", but this did not help save Kodak's fate.
Fujifilm seeks diversified development through market exploration, integrating its earliest imaging business (traditional film, digital cameras, digital printing equipment), information business (optical materials such as printing, medical and other optical equipment) The three major business sectors of , document processing and document processing have been adjusted into six key development businesses: medical life sciences, high-performance materials, optical components, electronic imaging, document processing and printing. The traditional film business only accounts for 2% of the company's overall revenue.
As China’s “Film King”, Lucky’s transformation has always attracted attention from the outside world. After realizing that the profits created by just adjusting the product structure were not enough to sustain the company's continued development, Lucky chose optical films (materials widely used in the fields of optics and optoelectronics technology, flat-panel TVs) based on the digital transformation of its original business. One of the key materials relied on by LCD screens such as mobile phones and notebook computers is optical film). As the main direction of industrial structure adjustment, efforts are being made in areas that are technology-intensive, capital-intensive, technically difficult, and have high added value.
Although it is all due to the arrival of the digital age that the traditional film industry has declined and companies have been forced to transform, from the market situation, only Kodak is facing bankruptcy after poor transformation. This is because Kodak is in Passive transformation, Fuji and Lucky made timely adjustments to their business and strategies during the development process. Although the transformation was not very successful, they still maintained the momentum of subsequent development. However, after Kodak failed to "bet", it was unable to be led by the market. Without transformation, little results will be achieved after many years.
2. The century-old store needs more "innovation"
The decline of Kodak is not only due to its lag in technological innovation, but also the inevitable result of its neglect of consumer experience. It was not until 2003 that Kodak announced its full-scale entry into the digital industry, and subsequently sold its medical imaging business and related patent rights.
However, at that time, Japanese brands such as Canon and Fuji had already occupied the leading position in "digital imaging", and even companies such as South Korea's Samsung and even China's Huaqi had begun to take shape. At this time, the behemoth Kodak had lost the opportunity to occupy "digital imaging".
In this era of rapid change, only "innovation" is the unchanging truth. This kind of innovation is not only based on technology and management levels, but also on business models and even consumer experience levels. For established companies, they will either die due to stubbornness and arrogance, or they will be reborn through continuous innovation.
Although, there is no absolute evergreen foundation in the world, and the life and death of an enterprise is full of many uncertain factors. Similarly, although innovation and change cannot completely ensure that an enterprise will remain at the forefront, it is a necessary prerequisite for its continued survival and development. Anyone who rests on its laurels without thinking about innovation will have difficulty winning the future, and arrogance and neglect of consumer experience will make it even more difficult to last.